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Biggest technology impact? It's not what you think

Here’s a question that I’ve been hearing a lot lately: What will drive the biggest changes in our financial planning profession?

When I look at today’s tech landscape from a historical perspective, it’s easy to be amazed. I actually remember when software was first introduced into the profession (am I dating myself a bit?) and when financial planners were buying their first 8086 computers, those large boxes complete with disk drives. Push a button and a dot matrix printer would spit out a 40-page canned document which included net worth statements and future projections of client account values 30 or 40 years in the future down to the penny—along with portfolio designs and recommendations. Think of it as Robo 1.0.

Today, we have a galaxy of bright, shiny technology, all of it potentially available on the phone you carry in your pocket. You can talk to your computer and it performs functions or searches. If you don’t like the keyboard, just touch the screen. The next Intel computer chip will have the processing power of the human mind, and quantum computing is not far behind.

So which of these exciting new developments do I think will make the biggest technology impact on financial planning firms going forward? None of them. The biggest impact will come, as always, from changes (sometimes painful) in human behavior.

The real challenge in the profession today is clearly not limitations on technology or innovation; just walk around the T3 exhibit hall, and you see plenty of new stuff coming at us every year. We have finally come to the place where we realize there is nothing to fear from disruptively creative programs that automate things that financial planners have traditionally done by hand. It is no longer regarded as a mortal threat to your service model if computers do some things that clients have traditionally found valuable (creating tailored asset allocations, for instance) as well or better than you do.

I don’t know what tech will bring us tomorrow, much less 10 or 15 years in the future. But I know that today, and every year going forward, the biggest key to unlocking all those capabilities will be how well financial planning firms adapt to them. Humans are the limiting factor. Their ability to overcome their own limitations will have a far bigger impact on the profession than whatever tools our most creative software engineers present us with.

There are several components to this. The most obvious is resistance to change. The old adage: “if it ain’t broke, don’t fix it” no longer applies. When I talk with (primarily younger) advisors, the first thing they bring up is how the company founders are resisting the obvious benefits of switching from legacy software to something faster, newer and better. The senior advisors are comfortable with their current systems, procedures, inputs and interfaces, even if they require a lot of manual entry and hand-made calculations. In some cases, the founders are even resisting the latest upgrade, because it means they have to change their old, comfortable habits. The good ol’ spreadsheet is good enough.

The second piece is adoption. It’s not uncommon to hear software vendors say that their average customer only uses a small fraction of the capabilities their system provides. People still use the CRM as a rolodex in the cloud, instead of as a total practice management tool with handy compliance features. If every single advisory firm simply stopped for a moment and spent the time and money on better internal training, getting the full value of what they already have, the profession as a whole would experience instant leaps forward in productivity and service.

The third human element that is holding back our tech evolutionary process is integration. Most of the name-brand software programs provide levels of communication that would have astonished the most advanced techie just five or 10 years ago. We have single sign-on where you can work with any program from any other one, just by clicking an icon in the upper right-hand corner. With some custom programming, it is now possible for one piece of software to trigger processes in other tech solutions. As a simple example, when you sign up a new client, the system can automatically populate, prepare and print out (in PDF or paper form) the new client agreements, and communicate with the custodian’s central database to retrieve pre-populated ACATs forms. You can update a financial plan through changes in the client record in the portfolio management or CRM system.

But before we can get the full benefit of these integrated processes, the firm needs to define its systems and procedures internally. At most of the firms I talk to, there are still a lot of one-off behaviors that, by definition, cannot be programmed into a software system. When you’re reinventing the wheel with every single client task, you are forgoing all the benefits that technology was intended to provide.

It’s possible that we, as a profession, will never get the full benefit of the new tech solutions. New ones are coming at us faster than we can track, and it obviously doesn’t make sense to change over your entire software suite every two or three years just because new capabilities are introduced by new providers.

If we could manage to defeat these built-in obstacles to intelligent tech adoption—that is, succumbing to all-too-human inertia and the willingness to settle for a “good enough” solution that is increasingly behind the times; avoiding looking at the marketplace because it presents you with bewildering amount of choice; buying shiny new software programs and never spending the time or money to get the staff utilizing more than 15% of them; or not being willing to go through a painful process of rethinking and streamlining business procedures so technology can do more cheaply what humans do expensively—it would make a far bigger difference to the profession’s productivity and service than the coolest AI robo on your smartphone. Technology can only do what we allow it to, and right now I don’t think we, as a profession, are being very permissive.

The biggest disruption I see on the near horizon is that a handful of firms will figure out how to get the most out of what’s offered, and intelligently upgrade to new software as it’s developed. Those firms that figure out how to master the human side of technology are going to enjoy a huge advantage over the others, and truly drive change in the profession.

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The new Generation D client is tech-savvy and wants to be part of the planning process. My financial planning software, Financial Mappers it is designed so either the client or the advisor can create a plan, share the plan with the other party so they can collaborate on the financial planning process. It saves the advisor time, builds a trusted relationship and negates AI as the client is indicating their future intentions. The adviser simply has to provide the best solution for those intentions